Where's the Beef? President Obama Comes Up Short on South Korean Trade Agreement

November 11, 2010

By ABCNEWS.COM

Jake Tapper and Sunlen Miller report:

SEOUL, SOUTH KOREA -- President Obama and his trade negotiators failed to convince their South Korean counterparts to expand market access for American automobiles and beef Thursday, sinking hopes that President Obama would leave Seoul with the free trade agreement his administration has pursued so vigorously.

President Obama and South Korean President Lee Myung-bak acknowledged the bottleneck at a joint press conference. Both leaders tried to spin the impasse.

President Lee said that he and President Obama have agreed to give South Korean trade minister Kim Jong-hoon and US Trade Representative Ron Kirk “more time so that they can finalize the technical issues. And President Obama and I will continue to work together so that we can have a mutually acceptable agreement at the earliest possible date.”

After meeting with President Lee in June, President Obama seemed to hope the agreement would be close to done by now – which, sources said, it is not. “I want to make sure that everything is lined up properly by the time that I visit Korea in November,” President Obama said then. “And then in the few months that follow that, I intend to present it to Congress.”

The president’s ability to keep that timeline seems to be questionable.

Due to an avalanche of taxes and other customs rules and regulations, US automakers exported just 6,140 vehicles to South Korea in 2009, according to the Korea Herald. That same year, Korean automakers Hyundai and Kia sold 735,000 cars and light trucks to American consumers.

Beef important is an even dicier issue for President Lee, who faced protests and candle-light vigils from thousands of Koreans over his decision to re-open South Korea to imports of US beef following the outbreak of mad cow disease in the U.S. American ranchers in response limited their exports to younger cattle, who are less susceptible to the disease. American beef is currently subject to a 40% tarrif in South Korea.

The failure to reach an agreement was not unexpected – negotiators didn’t even focus on beef exports, the disagreements are seemingly so irreconcilable at this time – but the news was a disappointment for President Obama and his team, who say an agreement would increase the export of American goods to South Korea by approximately $10 billion, with billions more in services, supporting more than 70,000 jobs in the U.S.

South Korea would also stand to gain, President Obama insisted today, by gaining greater “access to the American economy, which would support jobs, raise living standards and offer more choices for Korean consumers…So have asked out teams to work tirelessly in the coming days and weeks to get this completed and we are confident that we will do so.”

“We don't want months to pass before we get this done," Mr. Obama said. "We want this to be done in a matter of weeks."

After the press conference, Kirk told reporters that "President Obama has been up front in every conversation with President Lee about the disparity in terms of market access for the American automotive industry…as well as having more progress and full implementation of a separate beef protocol to resuming full sale of all beef products to Korea.”

Then-President George W. Bush and then-South Korean President Roh Moo-hyun signed the agreement in 2007, but the Democratic Congress refused to ratify the treaty, arguing that it didn’t do enough to alleviate the trade imbalance or protect American workers. During the 2008 presidential campaign, then-Sen. Obama voiced the same concerns, but said as president his team would improve the treaty and push for its passage.

This being both Veterans’ Day in the US and the 60th anniversary of the Korean War, the Wall Street Journal’s Jonathan Weisman asked President Lee what he would say to the Americans who see “Hyundais on their roads, LG phones in their pockets, Samsung televisions on their walls” and think “South Korea epitomizes the kind of one-way trade relationship that President Obama discussed in India. What assurances can you give the American people, many of whom whose parents fought and died for your country, that they will finally get the ability to freely and fairly compete for the South Korean consumers with your conglomerates? “

Lee said American consumers should understand that American consumers have done “a tremendous job of helping…developing countries develop their economies” but that “when you look at a cell phone made by the LG, the core technology and the goods that are used by these LG companies to build one single cell phone, most of them are imported goods or parts. And many of them come from the United States and other countries, so you cannot say that it is 100 percent Korean manufactured.”

He also said that he wanted to “point out to the American consumers is that there is really no trade imbalance” between the two countries if one looks at trade more broadly. “The bilateral trade imbalance is about $8 billion between the U.S. and Korea,” he said, a “figure has been continuously going down” because of royalties Korean companies pay American companies every year.

The figure is actually closer to $10 billion. In 2009, the U.S. exported $28.6 billion worth of products to South Korea while importing $39.2 billion worth.